ABSTRACT This paper undertakes an historical analysis of regional trading bloc formation in the 1980s. This time period was characterized by the formation of major global trading blocs, especially the European Union and the North American Free Trade Agreement (NAFTA), at the same time existing national structures broke apart, most notably the Soviet Union. A gravity model based analysis of trade flow data indicates that two forces operated simultaneously during the study period, one leading to the formation of trading blocs (as captured by a dummy variable for “same regions”) and the other leading to the dissolution of trading blocs (based on the interaction of GNP and the dummy variable for “same regions”).
Cite this paper
O. Amos Jr., R. Miller and S. Kim, "Regional Economic Integration and the Formation of Global Trading Blocs: An Historical Analysis of the 1980s," Modern Economy, Vol. 3 No. 2, 2012, pp. 210-217. doi: 10.4236/me.2012.32029.
 B. Balassa, “The Theory of Economic Integration,” Richard D. Irwin, Inc., Homewood, 1961.
 J. J. Schott, Ed., “Free Trade and US Trade Policy,” Institute for International Economics, Washington, 1989, p. 32.
 J. H. Niedercorn and B. V. Bechdolt Jr., “An Economic Derivation of the ‘Gravity Law’ of Spatial Interaction,” Journal of Regional Science, Vol. 9, No. 2, 1969, p. 273.
 B. M. Russett, “International Regions and the International System: A Study in Political Ecology,” Rand McNally & Company, Chicago, 1967, p. 2.
 H. Linnemann, “An Econometric Study of International Trade Flow,” North-Holland Publishing Company, Amsterdam, 1966.
 R. McNally, “The New International Atlas,” McNally and Company, Chicago, 1983.
 J. J. Schott, “Trading Blocs and the World Trading System,” World Economy, Vol. 14, No. 1, 1991, pp. 2-3.
 L. C. Thurow, “GATT Is Dead,” Journal of Accountancy, Vol. 170, No. 3, 1990, pp. 36-39.
 DefenseMapping Agency, Hydrographic/Topographic Center, “Distances Between Ports,” US Government, Washington DC, 1985.
 V. J. Geraci and W. Prewo, “Bilateral Trade Flows and Transport Costs,” Review of Economics and Statistics, Vol. 59, No. 1, 1977, pp. 67-74.
 J. Rappleye and C. Willard, Interview, “Maurice F. Strong: Adaptations of the Blocs,” Financier, Vol. 13, No. 4, 1989.
 J. E. Garten, “Trading Blocs and the Evolving World Economy,” Current History, Vol. 88, No. 534, 1989, pp. 15-16 and 54-56.